Correlation Between Shanghai Pharmaceuticals and Vanfund Urban
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By analyzing existing cross correlation between Shanghai Pharmaceuticals Holding and Vanfund Urban Investment, you can compare the effects of market volatilities on Shanghai Pharmaceuticals and Vanfund Urban and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shanghai Pharmaceuticals with a short position of Vanfund Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pharmaceuticals and Vanfund Urban.
Diversification Opportunities for Shanghai Pharmaceuticals and Vanfund Urban
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Vanfund is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pharmaceuticals Holdi and Vanfund Urban Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanfund Urban Investment and Shanghai Pharmaceuticals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shanghai Pharmaceuticals Holding are associated (or correlated) with Vanfund Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanfund Urban Investment has no effect on the direction of Shanghai Pharmaceuticals i.e., Shanghai Pharmaceuticals and Vanfund Urban go up and down completely randomly.
Pair Corralation between Shanghai Pharmaceuticals and Vanfund Urban
Assuming the 90 days trading horizon Shanghai Pharmaceuticals is expected to generate 3.7 times less return on investment than Vanfund Urban. But when comparing it to its historical volatility, Shanghai Pharmaceuticals Holding is 1.84 times less risky than Vanfund Urban. It trades about 0.07 of its potential returns per unit of risk. Vanfund Urban Investment is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 363.00 in Vanfund Urban Investment on September 5, 2024 and sell it today you would earn a total of 226.00 from holding Vanfund Urban Investment or generate 62.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Pharmaceuticals Holdi vs. Vanfund Urban Investment
Performance |
| Timeline |
| Shanghai Pharmaceuticals |
| Vanfund Urban Investment |
Shanghai Pharmaceuticals and Vanfund Urban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pharmaceuticals and Vanfund Urban
The main advantage of trading using opposite Shanghai Pharmaceuticals and Vanfund Urban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pharmaceuticals position performs unexpectedly, Vanfund Urban can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanfund Urban will offset losses from the drop in Vanfund Urban's long position.The idea behind Shanghai Pharmaceuticals Holding and Vanfund Urban Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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